Woody Tasch, Founder and Chairman of Slow Money, pioneered the integration of asset management and philanthropic purpose in the 1990s as treasurer of the Jessie Smith Noyes Foundation and founding chairman of the Community Development Venture Capital Alliance. For ten years, through 2008, Tasch was chairman of Investors’ Circle, a network of angel investors, family offices, and social purpose funds and foundations that has invested $133 million in 200 early stage sustainability-promoting ventures and venture funds, since 1992. Woody is also the author of Inquiries into the Nature of Slow Money: Investing as if Food, Farms, and Fertility Mattered (Chelsea Green).
To start with, what is Slow Money, and what was the inspiration behind it?
Slow Money is basically two things. It’s a new vision of reconnecting money to the soil and investors to local economies, and it’s the network of people who are bringing those ideas into action. It’s a national network that’s composed of an emerging group of local chapters. Between the national network and the local chapters, we are setting up an infrastructure to help people put their money to work in local food systems.
I don’t think I can answer the second part of the question, because there are too many different facets. I can say reading Small is Beautiful or working in international development in the 70’s or doing small-scale venture capital in the 80’s or being a foundation treasurer in the 90’s. Through all of this, I’ve been circling around the idea of bringing social purpose and environmental responsibility together with the way we invest. Unfortunately, the vehicles that are out there now don’t get to the root problem of connecting people to the places where they live and to the soil. That’s about as fundamental as you can get.
Why do we need Slow Money now? What’s the urgency?
I can’t think of anything more important than getting control of our money. At this point in our history, we seem to have abdicated our sense of purpose to something called “The Market,” even though, deep down, millions of us know that “The Market” is the institutionalization of consumerism and industrialization: tobacco, weapons, and cars. Things, which, in the aggregate, are probably starting to cause more harm than good. Certainly more harm for future generations.
The only way to solve this is to address it directly. I am not big on federal policy and regulations because it seems to me you can’t get the answer at that scale. It’s too big, too abstract, too corrupted by special interests. To me, our only hope is for a lot of us over time to take a little of our money and start moving in a radically different direction. The good news is we have something very concrete we can start doing, which is investing in local food systems and small food enterprises.
There are a whole bunch of financial arguments you can make, but the real impulse for doing it is cultural, environmental, and social. We need to do this. We are going to save farms and help young farmers get on the land and develop soil fertility. We have to do this. Whatever we call it or however much money we make at it, we still have to do it.
What is the national organization up to?
National is priming the pump and our goal is to stimulate lots of small, highly decentralized nodes. This is not something that every place can invent all by themselves. There is a great need for information sharing, technical assistance, deal sharing, and relationship building at the national level. At the same time, there is a lot of sharing that needs to happen between the local chapters. We are kind of inventing it as we go because we have never done this before.
Right now, we are trying to scale our National Gathering and figure out a membership program that makes sense. We will be launching this on our website within a few weeks. We would like to think that if we have the right strategy, we could have tens of thousands of people joining Slow Money at say $50. Half of those dollars would go to fund local chapters. If we can attract twenty or thirty thousand members – which is roughly the membership of Slow Food U.S. – we could be steering about a half a million dollars a year to local chapters. However, we don’t know how long that will take: Slow Food is now 20 years old.
What are the models that are emerging at the local level and where are the local chapters located?
The local Slow Money chapters are really beautiful, with a quite wide ranging set of activities. There are 11 of them now. If you think of them along a continuum, one extreme might be St. Louis, where local members have lent $6,000 to one urban farmer to rent a few more acres of land. Then you move slightly up the ladder to Pittsboro, North Carolina, where 10 people have loaned a total of $23,500 to seven small food enterprises. A group in Maine has created the No Small Potatoes Investment Club. Twenty people are committing $5,000 a year each and will democratically decide where the money goes. Towards the other end of the spectrum, in Boulder, Colorado one high net-worth individual has committed $1,500,000 in collaboration with the Business Alliance for Local Living Economies (BALLE) and Transition Colorado. One deal was a $75,000 loan to a very established organic producer. The hope was that they would create a larger fund, but so far no other investors have come forward. All the way at the high end is a founding member of Slow Money who has committed 60 acres of land 15 miles from downtown Portland to develop a new farm incubator. That is going to be a several million dollar project and he is financing it all with his own money.
Every chapter is different. Some involve lots of small investors; others involve only one or two big ones. We don’t want there to be just one thing. I am pretty sure that over the next year, certain common needs and themes and sweet spots will arise. I am personally very intrigued with the investment club model and think it is highly likely that there will be several others created this year. Then we will learn whether or not this is really a good model for a Slow Money chapter.
What is drawing investors to Slow Money? Is it primarily social purpose or financial reasons?
It’s a mix. Sometimes people will say: “How can you do this? It’s high-risk investing with a low return. It’s not proven. How are you going to change investors’ minds?” My answer is that I am not trying to convince anybody: I view myself as a catalyst giving permission for people to do something they already know in their hearts needs to be done.
The motivation of the early adopters includes disgust, fear, and frustration at the way global financial markets work, but you also get those who say: “Well, I guess it might not be so stupid to have some money in farmland if the shit really hits the fan because farmland is a solid asset.” So you have those motivations alongside the realization that if we are going to have local food in schools and clean water and those kinds of things, we have to put some of our money to work to make it so. We can’t just wait for philanthropy and government to clean up the mess.
You have written about Slow Money as a hybrid of philanthropy and investing. What kinds of ownership models are emerging?
Most of what is happening in Slow Money so far are small loans that would be viewed by a bank as ridiculous because none of them have collateral. An investment advisor asked me: “What are you going to do if the farmer doesn’t repay the loan? Are you going to foreclose?“ I said “Of course not,” because the whole purpose of doing this is to help the farmer. I don’t think this is philanthropy, however – it’s just a different kind of investing. Investors are willing to take a different set of risk/return parameters because of the value the investment provides to their community.
There has not been any formal pooling of capital yet because when you start pooling capital, you get into a lot of complicated securities issues. That is why the investment club model is so promising: it offers a vehicle for small and large investors to work together and greatly simplifies the legal complexities.
At our national gatherings, we have an entrepreneurs’ showcase, where small food enterprises from all over the country come and make a pitch for funding. Many of them are looking for equity and some of those deals are getting done.
So I’m not presuming to say that it’s going to be one thing. It’s all Slow Money: money that we want to see go to work in small food enterprises. We always have a few nonprofits participating in our entrepreneur showcases as well. It’s mostly for-profits, but we make it a point to have a few nonprofits to make it clear to everybody that the financial boundaries that are defined by traditional financial activity are not what we care about. What we care about is the range of food enterprises that need help.
What kinds of for-profit businesses are coming to you asking for help?
It’s everything: individual producers, local processors, major organic brands, restaurants, distribution companies, companies providing alternatives to toxic chemicals, organic fertilizer companies, and so on. Every region is suffering from the same decimation of local infrastructure that happened over the last 75 years as everything got consolidated. Processing facilities rarely exist at the local level anymore. Same thing for distribution. We are starting to see local distribution companies springing up all over the country, but the industry is still dominated by a few major industrial distributors.
There are some wonderful examples of success stories, one of them being Gather Restaurant in Berkeley. They raised money from 62 investors – ranging in size from $5,000 to $400,000 – to open the restaurant. Restaurants are a non-traditional investment. The typical investor would never invest in them because they are perceived as too risky, but someone who really cares about and understands local food systems recognizes that restaurants that source locally are a really an important part of that system. And when a restaurant is successful, it can be a great investment.
If you look at our website, we have a list of the companies that presented at our National Gathering at Shelburne Farms last year. Just by looking at their names you can get a good idea of the types of enterprises we feature.
I’ve heard you quote a participant from one of your Slow Money Institutes who said: “Local is the distance the heart can travel.” That is certainly a beautiful definition, but are local chapters having to grapple with defining their boundaries?
Not in any systematic way. Central Maine is the most geographically dispersed – it’s not just one city, it’s the whole middle part of Maine. Northern California calls itself Northern California, not San Francisco. The first loan they made was about 30 or 40 miles towards San Francisco from Davis.
There are no formal geographic boundaries yet because no one has asked us to define them and we haven’t asked the chapters to define them. They are typically based on the size of the territory chapter organizers feel comfortable with. We expect that the original chapters will mature until it becomes obvious that there are enough people to form another chapter nearby. Right now, we are just working on getting a critical mass for the chapters we have.
One of the questions put forth in your Slow Money Principles is: “What would the world look like if we invested 50% of our assets within fifty miles of where we live?” If Slow Money succeeds at that level, how do you think the world would be different?
I hardly ever let myself be that optimistic. That question came up about ten years ago now when I was chairman of Investors’ Circle and it was really just to be provocative. But as the last couple of years have unfolded with Slow Money, I realized that question wasn’t just a query or a koan or a conundrum. It is what I actually believe is where we have to end up if our species is to survive on this planet.
What would it look like if we actually did it? We would have lots of extra capital and would spend time talking with our friends and neighbors about what to do with our money. We would see the results of our investments, so there would be immediate feedback. More money would be circulating within the local economy. We would have more organic farms, local produce in the schools, and more organic matter in the soil. Soil erosion and soil fertility is a huge issue that’s not even on anybody’s radar screen because it’s a very long-term issue. It will have taken us many hundreds of years to destroy the soil it took tens of thousands of years to create. Communities would likely function with a higher degree of social cohesion and civility.
That was not a very specific answer, but I don’t think I need to know the rest of the details. I wouldn’t pretend to know all the details.
Do you have any advice for us here in Sarasota as we consider starting a Slow Money fund or chapter in this area?
I don’t think I do actually. Once I am there, we can spend some time and I might get a feel for it, but the easiest thing would be for you to talk to other chapter leaders and find out how they dealt with their issues.
Is there anything else you’d like to say?
Take a few minutes to poke around our website. We’ve done a lot of upgrading to it. I think if newcomers spend 15 minutes looking around, they will get a pretty clear picture of who we are and what we are trying to do. Also, I recognize that only a small number of people can afford to travel to our National Gathering in San Francisco this year, but I want to make sure we are getting the word out to everyone we can.
I am optimistic that the chord we are striking is tapping into something that really does need to happen. I am not worried about how long it will take us to figure out how to do it, because we have been going in the wrong direction for so many years. The first thing I believe we need to do is to say out loud what we believe. This is why we have the Slow Money Principles. 15,000 people have signed the principles so far.
We are only into our second year now, but people are beginning to notice what we are doing, and that raises the stakes. I think the most important thing is not to rush into the doing of it. We will figure that stuff out. Once we have been doing it for a while, the answers will emerge. Right now, we are ringing a bell, and we’ve got to keep ringing that bell. You don’t just ring it once. We have to keep ringing it until the resonance is real.
I think we have to be open to the idea that we may be at the beginning of a sea change that will lead to a massive infusion of new organic farmers and that Slow Money could be part of that.